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THE PRIME MINISTER

THE PRIME MINISTER

DECISION No.565-TTg OF AUGUST 22, 1996 OF THE PRIME MINISTER ON THE MANAGEMENT OF THE CIRCULATION FOOD RESERVE

THE PRIME MINISTER

Pursuant to the Law of Organization of the Government of September 30, 1992;

At the proposals of the Minister of Agriculture and Rural Development, the Minister of Planning and Investment, the Minister of Finance, the Minister of Trade and the Chairman of the Government Pricing Commission,

DECIDES:

Article 1.- The Circulation Food Reserve is the amount of food (mainly rice) that the State assigns to the State food trading enterprises which have the conditions and managerial capacity for storage so as to maintain a food reserve for market intervention when the need arises with a view to ensuring the balance between supply and demand and stabilizing food prices.

Article 2.- Basing themselves on the situation of food production and the variation in the circulation of goods, the Minister of Planning and Investment, together with the Minister of Agriculture and Rural Development, shall make recommendation to the Prime Minister to decide the volume of food to be put into reserve each year. The capital to purchase the food for reserve is part of the operating capital of the enterprise drawn from the State budget. In case of difficulty which prevents the State budget from making timely or adequate allocations, the enterprise shall take initiative to take bank loans to procure in full the assigned amount of food for reserve, and the State Budget shall support it with finance for 100% of the interests on these loans throughout the period when the enterprises undertakes its assigned duty of maintaining the reserve as assigned.

Article 3.- The Minister of Agriculture and Rural Development shall, on the basis of the amount of food reserve assigned by the Prime Minister and the situation of food production and circulation, make decisions and bear the responsibility for those decisions to assign the amounts of food reserve to the enterprises and direct the release of reserve food into circulation as market interventions to ensure the balance between food supply and demand and stabilize food prices in each locality as well as in the whole country.

Article 4.- The enterprises which are assigned the duty of maintaining food reserve are authorized to decide the purchases, sales, circulation and renewal of the food in reserve in the course of their business operation so as to maintain the quality of the reserve food on condition that they bear all the incurred costs and all financial responsibility. The State shall not make up for any of their losses. At the same time they have to assure 100% of the circulation food reserve in stock before each cropping season and regularly have no less than 60% of their assigned amounts in stock. In case their food reserve shall not be tapped in full for market interventions, the enterprises may take the initiative to find markets to clear the food reserve of the previous cropping season. The whole amount of money thus obtained must be accounted separately and spent immediately on purchasing new food to put into reserve as replacement for circulation food reserve. The enterprises with inventories of reserve food belonging to the circulation reserve shall be given priority by the State to export these inventories as a way to repay debts.

Article 5.- The enterprises which are given allocations from the State Budget to carry out their duty of maintaining food reserve must maintain their allocated capital in line with the regime for maintaining operating capital prescribed by the Ministry of Finance and are exempted from the capital-use tax for these capital allocations. They shall be entitled to the profits generated by combining the use of the food reserve with their business operation in line with the existing financial regime.

Article 6.- The circulation food reserve must be located in regions and areas which are prone to fluctuations of food prices and kept in storage areas which are most convenient for release for price stabilization when the need arises.

Article 7.- The enterprises which are assigned the duty of maintaining circulation food reserve shall conduct a separate accounting for each ofhe tir purchases and sales of food to help stabilize food prices, make monthly reports on their inventories of food reserve (the volume in each store, the stock quality, the average price of the stock, etc.) to the superior managerial bodies, submit to the control and supervision, comply unconditionally with the orders for release made by the superior competent authorities, and undertake the selling of food for price stabilization purpose on the shortest notice possible.

Article 8.- Responsibilities of the Ministries in managing the food reserve:

- The Ministry of Planning and Investment together with the Ministry of Agriculture and Rural Development shall have to maintain the balance of the food resources, and design and submit to the Prime Minister for approval the volume of food to be put into reserve annually.

- The Ministry of Finance shall in cooperation with the Ministry of Planning and Investment ensure the provision of the necessary capital for the units assigned with the task of maintaining circulation food reserve to meet the need of purchasing food for reserve.

- The State Bank shall ensure full provision of loans for the units to purchase food to put into reserve as planned.

- The Ministry of Agriculture and Rural Development shall make decisions and bear responsibility before the Prime Minister for those decisions in procuring and regulating the circulation food reserve so as to ensure the balance of food supply and demand and the stabilization of food price, and shall, together with the Ministry of Finance and the State Pricing Commission, control and supervise the implementation as well as the maintenance of the capital for the circulation food reserve.

- The Government Pricing Commission shall, together with the Ministry of Finance and in response to the needs to ensure food prices, decide the sale price for the food in reserve.

In case the need to maintain the balance between food supply and demand and stabilize food prices demands that the sale price of reserve food be set lower than its purchase price, the decision-making level has to administer control and supervision of the sales accounting of the enterprises and, in coordination with the concerned agencies, make recommendation to the Prime Minister for solution to the losses of capital for this reserve.

Article 9.- This Decision applies to the management of the circulation food reserve derived from the capital allocated by the central State Budget. The Presidents of the People�s Committees of the provinces and cities directly under the Central Government shall, on the basis of the requirements and characteristics of the work of stabilizing food prices in their localities and this Decision, issue detailed regulations on the management of the circulation food reserve derived from the local budget capital allocations.

Article 10.- This Decision takes effect from the date its signing.

Article 11.- The Minister of Agriculture and Rural Development, the Minister of Planning and Investment, the Minister of Finance, the Minister of Trade, the Governor of the State Bank, and the Chairman of the Government Pricing Commission, are responsible for organizing and guiding the implementation of this Decision.

The General Directors of the Food Corporations and the Directors of the enterprises assigned with the task of maintaining circulation food reserve are responsible for organizing the implementation of this Decision.

For the Prime Minister

Deputy Prime Minister

PHAN VAN KHAI